The lines are blurring. Vince Dowdle, former exec at Mastercard, now working with Frax Finance. This is not only good news, it’s a seismic change. Is this the beginning of DeFi’s maturation, or its appropriation? As a representative of the financial inclusion movement, I’m personally committed to the dream that decentralized financial empowerment holds, particularly in fast-developing economies represented by Accra. The knot of concern in my stomach won’t go easily. So, is this the end of true decentralization as we know it?

Whose Freedom Are We Talking About?

DeFi, at its core, promised freedom. Freedom from banking gatekeepers, freedom from crazy fees, freedom to custody your own assets. It was a vision of a level playing field, where anyone with an internet connection could participate in the global economy. Let’s not kid ourselves, that vision never came to fruition. Lack of equity and inclusion accessibility, as we said before, is still a huge issue, especially in areas where internet is spotty and digital literacy is scarce.

Now, institutions like Mastercard and others are circling, attracted by both the potential profits and the technological innovation. Frax Finance, with its stated goal of being the “U.S. digital dollar,” is currently courting these giants. Her role is to be a bridge builder, to bring DeFi to a place that’s acceptable to banks, investment funds and regulators.

Whose interests are really being served by these overbuilt bridges? If so, are these systems truly built to empower the unbanked? Or do they just provide new tools for the banking cartel to continue to siphon value in new ways? Are they really decentralizing finance, or just building a newer, cooler, electronic centralized version of it?

The African Perspective: Empowerment or Exploitation?

I live and work in Accra. I see firsthand the struggles people face with traditional financial systems – the high interest rates, the bureaucratic hurdles, the lack of access to credit. In this sense, DeFi really can be a game-changer, providing new and innovative ways to save, lend and invest money. It would truly democratize transportation, by empowering small businesses, creating new economic opportunities, and lifting communities out of poverty.

Then there’s the question of whether or not Frax Finance and their ilk will actually be committed to serving the underserved. Or, instead, will they simply reproduce the same biases and inequities that exist in Finance 1.0? DeFi—empowerment tool or exploitation instrument Will we use these new decentralized technologies to empower the many or the few? This is critically important in Africa, where the digital divide remains profound.

This circumstance is reminiscent of almost… the colonial age. European powers landed in Africa with the promise of enlightenment and the advancement of humanity. Their ultimate objective was resource extraction and consolidation of control. Are we not seeing a similar dynamic play out in today’s DeFi space? Components of Institutions Institutions exist because they can provide political stability and legitimacy. Aren’t they all just innovating to capitalize on opportunities and pursue their profit and control maximizing objectives?

  • Increased Regulation: Institutional involvement inevitably leads to increased regulation. While some regulation is necessary to protect consumers, too much can stifle innovation and drive out smaller players.
  • Centralization of Power: Institutions have the resources and expertise to dominate the DeFi landscape. This could lead to a concentration of power in the hands of a few large entities, undermining the very idea of decentralization.
  • Erosion of Privacy: Institutions are subject to strict KYC/AML regulations. This could lead to increased surveillance and a loss of privacy for DeFi users.

Historically, financial innovations in the West have often been exported to the developing world with promises of prosperity, but the reality has often been far more complex, leading to debt crises and economic instability. We have to be extra careful to make sure that DeFi doesn’t take the same course.

Unexpected Connections: The Echo of Colonialism

We need to continue to push for transparency and accountability. Rather, let’s finally deliver for everyone, everywhere—not just the rich and well-connected. To make that happen, we need to foster the right kinds of projects—ones that embrace decentralization, community ownership, and a social impact focus from the outset.

This moment, marked by the arrival of the first alumni from Mastercard’s experimental CBDC into Frax Finance, represents a key turning point. It's a test of our collective will. Will we allow traditional finance to eat our DeFi lunch? Or instead, will we resist to keep it true to its initial ideal of creating more freedom and empowerment. What’s the answer, you might ask, and I assert that the answer will determine the future of smart finance for decades to come.

Now is the time to reclaim our public participation, start asking the tough questions and make our voices heard. The future of DeFi – and the future of financial inclusion – rests on it.

The entry of Mastercard's alumni into Frax Finance signifies a critical juncture. It's a test of our collective will. Will we allow DeFi to be swallowed up by the forces of traditional finance, or will we fight to preserve its original promise of freedom and empowerment? The answer, I believe, will shape the future of finance for generations to come.

It's time to ask the hard questions and make our voices heard. The future of DeFi – and the future of financial inclusion – depends on it.